Efficiency Of Monetary Policy Research Articles

Association between Family Functioning, Child Emotional and Behavioral Problems, and Parental Stress during the COVID-19 Pandemic in Thailand.

The COVID-19 pandemic has had a huge impact on people of all ages, especially children. This is a cross-sectional study in Thailand to explore the emotional and behavioral problems of school-aged children and associated factors during the lockdown. An online survey was conducted with 942 parents of school-age children. Strengths and Difficulties Questionnaire (SDQ) scores showed that total difficulties and all subscale difficulties (hyperactivity, conduct problems, peer problems, and emotional problems) were increased, whereas prosocial behaviors were decreased in the pandemic period. The factors significantly associated with higher parental stress were higher emotional and peer problems after the COVID-19 outbreak, high family difficulty, and sleep problems. Sleep problems were associated with all children's difficulties, except prosocial behavior. High score in family difficulty subscale was associated with increased emotional problems, whereas poor family communication was associated with increased hyperactivity. Appetite change was negatively associated with parental stress and some children's difficulties. Higher household income, family time, physical activities, and recreational activities were associated with a decreased level of some difficulties and family functioning problems, but positively with an increase in the prosocial behavior of children. Additionally, higher screen time was associated with a higher level of hyperactivity, conduct problems, and poor family communication. This study demonstrated that Thai children were at high risk of developing mental health problems during the pandemic lockdown. We suggest that intervention to promote physical activities and reduce screen time is needed. Moreover, efficient monetary policy is urgently required. The limitations here include a recall bias with no baseline to compare and a potential selection bias due to parental selection and a webpage announcement.

Climate change and the influence of monetary policy in China

ABSTRACT We investigate whether climate change affects the efficiency of monetary policy. We use temperature shocks, calculated as temperature deviations from historical average temperatures, to proxy climate change, and utilize a threshold vector autoregression model (TVAR) to estimate the impact of expansionary and tight monetary shocks on economic output under high and low regimes of temperature shocks. Our results characterize a climate change regime-dependent monetary policy. Expansionary monetary policy is less efficient and the negative impact of tight monetary policy is enhanced, when climate change is severe. The results can be explained by the climate-induced credit constraint of commercial banks. Higher temperature shocks lead to increases in banks’ non-performing loan ratios, which results in larger credit constraints of banks. Banks tend to be more prudent in credit expansion, and the bank credit channel of monetary policy transmissions is weakened.

A case study on finding efficient monetary policy to solve Shenzhen's excessive-priced housing

Background The real estate market has developed rapidly since 1980s in Shenzhen, China. This study aims to find and investigate an efficient monetary policy to solve the excessive-priced housing problem in Shenzhen. Methods By regulating the contractionary monetary policy which are open market operation, the discount rate and legal reserve deposit can decrease the accelerating rate of excessive housing price in Shenzhen. Firstly, the relationship between housing prices and the other three tools of monetary policy has been analyzed. Then, from collecting the secondary data online, models were established by using the ordinary least square to find the correlation between housing price and money supply from 2011 to 2017. Results This model shows the relationship with the change of the logarithmic form of the amount of M2 and housing index is significantly positive. With the decrease in change of the logarithmic form of the amount of M2, the increase in housing index can be controlled in a relative decelerated rate. Conclusions In the reduced monetary supply, the housing price can be managed to an ideal condition and then it can help the government to achieve the goal of maintaining Shenzhen’s healthy real estate market development.

Revisiting the monetary transmission mechanism via banking from the perspective of credit creation

<abstract> <p>Many transmission channels of monetary policy have been proposed to enrich and deepen the understanding of its mechanisms. However, some channels have not been clarified, particularly for those unconventional quantitative policies implemented after 2008 financial crisis. In this paper, we develop a unified model of a credit economy where bank regulations and decisions and loanable funds market are placed at a central position, while stocks and flows are incorporated with each other to formulate banks' credit creation and circulation. We find that bank regulations can induce some new channels of monetary transmission by imposing credit constraints, including the new bank capital channel, the credit supply channel, the new bank balance sheet channel, and the new bank risk-taking channel. Comparing these channels with the traditional ones, we underscore the impact of bank regulations on monetary transmission. As aggregate demand can be decomposed into two monetary flows generated by money circulation and bank lending respectively, the direct channels of monetary transmission to aggregate demand can be renewed as follows: the money channel, the narrow money circulation channel, the new bank lending channel, and the repayment channel. In addition, based on the relevant data from the United States, we have conducted vector autoregressive (VAR) impulse response analysis to confirm the effectiveness of some direct channels. Our work not only aids in revisiting the monetary transmission from a credit view but also facilitates the assessment of efficiency of monetary policy.</p> </abstract>

Limited Efficiency of Monetary Policy on Local Inflation Rates and Output

This is the second article of a series of two that documents the limited efficiency of the Peruvian monetary policy on local inflation rates. With this research I deepen on my preliminary findings on the unobserved effects of Peruvian monetary policy using departmental Phillips curves. On this occasion, the motivation seeks to answer the question: by incorporating the NAIRU-Keynesian and neo-Keynesian structural model criteria for the Peruvian case, what other unobserved effects of monetary policy would be found in Peru’s departments? Two models of structural equations are developed to estimate the impact of monetary policy at sub-national levels, the first considers the unemployment rate (NAIRU-Keynesian) and the second considers the departmental GDP gap, from which there are counterproductive results that start from the misalignment of departmental economic cycles with the national one which generates inefficiency of monetary policy to reduce departmental inflation, the increase in departmental unemployment and the decrease in the departmental GDP gap.

Monetary policy transmission in segmented markets

Repo markets are an important first stage of monetary policy transmission. In the European repo market, the majority of participants, including non-dealer banks and non-banks, do not have access to centralized trading platforms. Rather, they rely on OTC intermediation by a small number of dealers that exert significant market power. Dealer market power causes the passthrough of the ECB's policy rate to be inefficient and unequal. Allowing market participants access to centralized trading platforms, or a secured deposit facility with the central bank, could improve the transmission efficiency of monetary policy while reducing the dispersion in repo rates across customers.

INTEREST RATE PASS-THROUGH IN UKRAINE: EVIDENCE FROM THE BANK OWNERSHIP

A full-scale war started by russian federation on February 24th, 2022 disrupted the classic monetary policy Ukraine has been conducting for years. Nevertheless, it remains critical to preserve price stability. In June 2022, NBU significantly increased its key policy rate aiming to decrease inflationary pressure through higher market interest rates. Hence, the Central bank still relies on the interest rate transmission mechanism despite the war. This research is focused on the transmission of the key policy rate changes to the commercial bank interest rates depending on the banking sector structure. We believe that this research is useful not only for the west academia but policymakers since it helps to assess monetary policy efficiency. We tested the transmission of changes in key policy rates on new loans’ and deposits’ interest rates of different maturities and groups of banks based on banks’ ownership that in the case of Ukraine closely connected to the bank's efficiency. We applied autoregressive distributed lag models with error correction forms. Our research confirms that interest rate pass-through from the key policy rate to the bank interest rates differs for banking groups. Less effective banks have more powerful transmission to their new deposits interest rates and weaker to new loans interest rates, therefore, exposed to interest risk. Moreover, according to our results, interest rate pass-through is weaker with higher maturity among both deposits and loans.

The interest rate transmission mechanism and transmission efficiency of monetary policy in China: empirical analysis based on TVP-SV-VAR model

Our theoretical model sets money market short-term interest rate as policy rate and reveals the mechanism of policy rate transmission to bond market interest rate and credit market interest rate. We apply the TVP-SV-VAR model to examine changes in transmission efficiency during these processes. We find that after central bank deregulated interest rates, the transmission efficiency of monetary policy interest rates increased significantly. The transmission of short-term interest rates to risk-free rates is the most efficient, followed by the transmission to long-term interest rates, but the transmission efficiency to loan rates is not ideal. In long sample period, the transmission of financial market benchmark interest rate SHIBOR007 to other interest rates is more desirable than IBO007 and R007. In short sample period, transmission of DR007 changes to interest rate changes in other markets is similar to SHIBOR007, indicating that using DR007 as central bank’s policy target is highly feasible.

Monetary policy effectiveness in Asian developing economies: the moderating role of financial sector development

PurposeThis study aims to explore the impact of monetary policy on bank lending rate with the moderating effects of financial sector development for eight Asian developing economics.Design/methodology/approachThis study uses panel autoregressive distributed lag/pooled mean group estimation over the period ranging from 1980 to 2020.FindingsThe empirical results exhibit an inverse link between monetary policy measured by broad money supply on the bank lending rate, indicating that the increase in the money supply by the central bank lowers the demand for loans and thereby lowers the cost of loan. Moreover, financial sector development decreases the lending rate and thus lowers cost of loan. It is also noted that the interactive term of monetary policy by lending broad money supply and financial sector development showed a positive impact on the lending rate in selected Asian developing countries during the period under the study.Practical implicationsThe outcomes have many relevant policy implications that stronger financial development sector contributes to the efficiency of monetary policy. Regulators and policymakers are therefore recommended to pursue greater financial sector development to lower the cost for fund searchers and to lower the cost of loans, money supply increase is suggested.Originality/valueThis study contributes to the extant literature on the factors affecting lending rate with the prime aims of monetary policy effectiveness. This study also included financial sector development with some other variables and an interactive term of monetary policy with financial development to have new insight impact of both on the lending rate in developing Asian economies.

Identifying efficient policy mix under different targeting regimes: A tale of two crises

We examine the influence of demand shock, supply shock and the monetary policy shock on macroeconomic variables using the New Keynesian Dynamic Stochastic General Equilibrium framework. Our study tries to identify the efficient monetary policy mix as an antidote to the prevailing economic fragilities that originated due to the COVID-19 pandemic and geopolitical conflict in case of India and China. Under both simulated and Bayesian analysis, our findings revealed the inflationary effect of demand and supply shock with a target-oriented monetary policy under sticky prices as the efficient policy tool to counter these effects. The macroeconomic projections depicted the favourable influence of output due to active intervention of target-oriented monetary policy in both these economies.

Hiệu quả truyền tải chính sách tiền tệ qua kênh tín dụng thương mại ở Việt Nam

Existing research in Vietnam mainly focuses on the traditional transmission channels of monetary policy. This article investigates the effectiveness of monetary policy transmission through an alternative funding channel for bank credit, which is the trade credit channel. Panel data regression was conducted with datasets from 501 Vietnamese enterprises in the period of the second quarter of 2010 to the second quarter of 2020. The results show that most enterprises in Vietnam do not have the ability to use trade credit as an alternative fund for bank credit in the context of monetary tightening, thereby helping to maintain or even increase the transmission efficiency of monetary policy. The transmission of monetary policy through the trade credit channel is most effective for enterprises with low credit ratings and is partly weakened for large enterprises, which can use trade credit as complementary short-term financing in the situation of credit supply shortage.

The impact of macroeconomic variables on foreign direct investment in Nigeria

This study's main goal is to determine the effect that specific macroeconomic factors have on the amount of foreign direct investment (FDI) flowing into Nigeria. The ex post facto research design was adopted, and it used exchange rate, inflation rate, monetary policy rate (MPR), and gross domestic product growth (GDP) rate as the macroeconomic variables. The quantity of inflow between 1986 and 2020 was made up of FDI (dependent variable). Because the model variables were integrated in a mixed order of both level and first difference, the autoregressive distributed lag (ARDL) technique was used. The selected macroeconomic variables and FDI were bound by a long-run connection, according to the results of the ARDL bounds test for cointegration. The calculated short-run coefficients showed that GDP growth rate and monetary policy rate were the primary macroeconomic variables that considerably increased FDI inflow in Nigeria, whereas inflation and exchange rate were the major macroeconomic variables that significantly decreased FDI inflow. In the long term, the GDP growth rate and the exchange rate had a beneficial influence on FDI influx, whereas the monetary policy rate had a large negative effect. According to these empirical findings, it is advised that Nigeria's monetary authorities should support strong GDP growth, exchange rate stability, and efficient monetary policy rates in order to draw FDI into the country and create efficient foreign exchange policies that will attract foreign investors.

The effectiveness of labor market indicators for conducting monetary policy: Evidence from the Korean economy

The effectiveness of labor market indicators for monetary policy has not yet been theoretically established despite their practical significance to practitioners. To bridge the gap between theory and practice, this paper investigates whether labor market indicators may improve the efficiency of monetary policy implementation by providing the monetary authority with timely information about current economic conditions. To this end, a small open macroeconomic model with endogenous involuntary unemployment is constructed, estimated, and simulated based on the Korean economy. We find that a monetary policy rule augmented by labor market indicators outperforms one using a conventional output gap in terms of social welfare. • The effectiveness of using labor market indicators for monetary policy is unexplored. • This study examines if labor market indicators improve monetary policy efficiency. • We construct and analyze a macroeconomic model with involuntary unemployment. • Labor market indicators outperform the conventional output gap in the Taylor rule.

Monetary Policy Efficiency, Financial Market Development and Financial Stability in Developing Countries

This study evaluated the impact of monetary policy efficiency (MPE) and financial market development (FMD) on financial stability using the credit gap as a proxy. New datasets were constructed for the MPE of 63 developing economies from 1990:Q1 to 2021:Q4. The panel homogeneity assumption was verified using the Chow and Roy-Zellner tests, and the findings showed that the model was not homogenous. Thus, the pooled mean group (PMG) estimator was used. The empirical results revealed that MPE and FMD significantly impacted the credit gap. The effects of MPE and FMD on financial stability were as substitutes. Since the sample was divided into two groups: high and low-middle income nations, the conclusion was robust, and the negative connection between the variables remained. In addition, a dynamic panel estimation was also applied, which found significant effects of MPE and FMD on the credit gap.

EFFECT OF CREDIT ON AGRICULTURAL EXPORTS IN NIGERIA (1980-2018)

This study examined the effect of credit on agricultural exports in Nigeria. Time series data spanning the period between 1980 and 2018 were obtained from publications of Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and Food and Agriculture Organisation database. Data were analysed using means, coefficient of variation, co-integration analysis and vector error correction mechanism (VECM). Descriptive results revealed a fluctuating trend in the volume of agricultural exports and credit to the agricultural sector with a mean of 351.99 tonnes and ₦80162.45 million respectively over the study period. There was a decreasing trend in the contribution of agricultural exports to GDP in Nigeria over the study period. Co-integration analysis affirmed a long run relationship among the variables. Results of VECM regression analysis revealed a positive relationship between credit to the agricultural sector, exchange rate and volume of agricultural exports in the short run. Exchange rate and inflation rate positively affects volume of agricultural exports, while ratio of export prices to producer prices and interest rate negatively affects volume of agricultural exports in the long run. The study concluded that credit to the agricultural sector, exchange rate, inflation rate, ratio of export prices to producer prices and interest rate are significant determinants of volume of agricultural exports. Hence, increased low interest rate commercial banks credit to the agricultural sector, effective and efficient monetary policies and bridging the gap between producer prices and world prices of agricultural export commodities will stimulate improved agricultural export earnings.

Assessment of impacts of green bonds on renewable energy utilization efficiency

Due to the consumption of renewable natural resources caused by population growth, industrialization, and urbanization, renewable resources' effectiveness has become controversial in recent decades. This paper examines the effect of issued green bonds on the effectiveness of renewable natural resource utilization in 15 selected Asia-Pacific countries during 2012–2021. Conducting the Fully Modified Ordinary Least Squares (FMOLS) estimation, the preliminary results confirmed that the issued green bonds have positive and statistically significant impacts on renewable natural resource utilization efficiency in the short-term and long-term. However, the magnitude of the impacts is more extensive in the long-term context. Urbanization has a negative short-term coefficient, while it positively impacts the natural resource utilization efficiency in the long term. Inflation rate negatively affects renewable natural resource utilization efficiency. As practical policies, implementing operational plans to develop the green bonds market, promoting green foreign direct investment, efficient monetary policy to lower inflation rate, and enhancing digital green bonds are recommended.

Effect of Monetary Policy Rate on Market Interest Rates in Nigeria: A Threshold and NARDL Approach

This study examines the effect of monetary policy rate (MPR) on market interest rates in Nigeria. For parsimony, we develop two indexes called the short-term interest rate (SINT) and Lending interest rate (LINT) to represent deposit and lending rates respectively. The nonlinear autoregressive distributed lag (NARDL) and threshold regression models are adopted. The study uses monthly data from 2002:M1 to 2019:M12. The results of the threshold regression model indicate that the degree of the effect of MPR on SINT and LINT above the estimated threshold of 11 and 13 percent respectively is greater and significant than if MPR were to be below the threshold. Moreover, estimates from the nonlinear ARDL model show that increasing MPR induces a positive effect on short-term and lending interest rates, while a negative effect holds if MPR is decreased. For LINT, the magnitude of the negative effect is little, while for SINT, the effect is statistically insignificant. This depicts the downward stickiness of prices, which supports the argument that the ineffectiveness of MPR only holds when it is adjusted downward. We recommend that the monetary authority should focus on reforming the banking system in ways that remove downward rigidities in the effect of MPR on interest rates in order to engender greater efficiency of monetary policy.

Effects of monetary policy credibility and the open economy trilemma on monetary policy efficiency

AbstractThis study investigates the effects of monetary policy credibility and the open economy trilemma on monetary policy efficiency in developing countries. Based on a sample of 28 developing countries, the findings reveal that monetary policy credibility increases monetary policy efficiency. The results also show that central banks in developing countries have more efficient monetary policies when they choose a policy arrangement contrary to the ‘middle‐ground convergence’; but, to the extent they accumulate international reserves, it allows them to move to a middle‐ground strategy. Regarding the trilemma, the estimates suggest when monetary policy is independent, monetary policy is more efficient. Furthermore, when financial openness and exchange rate stability are deepened, central banks become less efficient in conducting monetary policy. However, when countries hold higher levels of international reserves, the positive effect of monetary autonomy on monetary policy efficiency decreases and the negative effect of financial liberalisation on monetary policy efficiency decreases.

The Nexus between Financial Inclusion and Monetary Policy: The Case Study of Selected ASEAN Countries

This study examines the relationship between financial inclusion and monetary policy in nine selected ASEAN (Association of Southeast Asian Nations) countries during 2010-2019. To answer the objective of this study, the Vector Error Correction Model (VECM) is used to analyze the effect of financial inclusion on inflation as a proxy of monetary policy effectiveness. In addition, the causality between financial inclusion and monetary policy is also examined in this study. The data used are panels data and collected through secondary sources. The multidimensional approach of IFI (index of financial inclusion) is constructed to represent a comprehensive financial inclusion measurement. The results showed that financial inclusion had a negative effect on inflation in the long-term and short-term; it indicates that an increase in financial inclusion will lower inflation which eventually increases the effectiveness of monetary policy in Indonesia, Malaysia, Thailand, Philippines, Singapore, Vietnam, Cambodia, Myanmar, and Laos. Moreover, a causality exists between financial inclusion indicators and monetary policy in selected ASEAN countries. This study concludes that financial inclusion through access and usage of financial services improves the efficiency of monetary policy in nine selected ASEAN countries in controlling inflation. This study suggests that monetary authorities must emphasize the link between financial inclusion and monetary policy objectives. Advanced financial inclusion can help policymakers formulate and implement monetary policies contributing to economic stability and sustainable growth.

Explanation and classification of technological entrepreneurship financing policies: lessons from Iran

PurposeAs technological entrepreneurship has distinctive characteristics and needs particular conceptualizations, it is also important to have specific theoretical developments about its technological entrepreneurship. Studying the related domains like entrepreneurship and technology can be helpful in this path; however, their differences should be considered as well. The purpose of this study is to design a model in support of technological entrepreneurship. Since financing is considered as the main restriction on creating and developing technological entrepreneurship, the focus of this study is the research of financial policies of technological entrepreneurship..Design/methodology/approachThis research is from the qualitative point of view and in terms of the purpose of application-development that has been done in the second part. At the first step, Iran’s (IRI) national comprehensive policies have been studied from 1993 to 2020; out of 52 documents, 7 were relevant, of which 38 policies were eventually selected. Then, policy statements were explored, and open coding and categorization has been done through theme analysis approach to attain fundamental themes and organizational themes. In the second step, the themes were extracted in the form of soft research method with the approach of interpretive structural modeling to level the financing policies of technological entrepreneurship in Iran.FindingsThe results show that the most important factors influencing financing and entrepreneurship in Iran are increasing the productivity of goods and services, supporting entrepreneurship, increasing the efficiency of monetary policies that are in the first level.Research limitations/implicationsResearch limitations include access to upstream documents, strategies, administrative and organizational coordination to study documents.Practical implicationsThese findings are very important to scholars, the policymakers and technological entrepreneurship operators in designing their financing strategies. The results show that the most important factors influencing financing and entrepreneurship in Iran are increasing the productivity of goods and services, supporting entrepreneurship, increasing the efficiency of monetary policies.Originality/valueTo the best of the author’s knowledge, this is the first study to explore the explanation and classification of technology-based entrepreneurship financing policies in Iran. Moreover, the findings of this study would prove useful in detailed studies of financing policies in the Middle Eastern countries as well.